Swiss Banks Trial Blockchain
New Delhi, September 17, 2025 – Swiss banks have made a groundbreaking advancement in digital finance. UBS, PostFinance, and Sygnum Bank successfully completed the first blockchain payment using real bank deposits. This major milestone was announced on Tuesday by the Swiss Bankers Association. Blockchain payment using real bank deposits, marks a significant evolution in the traditional banking model.
This achievement resulted from a feasibility study exploring the use of deposit tokens. These tokens represent actual money stored in bank accounts, but they move across a blockchain system. By using these digital representations, clients were able to complete transactions directly on the blockchain. This reduced the need for conventional clearing systems and introduced faster, secure processing.
The system’s design allows for transactions to occur across multiple banking institutions. This is a departure from previous models, which typically operated within the boundaries of one institution. Thomas Frei, Head of Product Innovation at Sygnum Bank, described this as a first-of-its-kind innovation. He emphasized that enabling transfers between different banks had not been possible until now.
Frei also explained how the new system helps reduce counterparty risks. Each transaction includes mechanisms to manage and minimize exposure between parties. This feature enhances trust and reliability in interbank transactions. Importantly, the study showed that multiple banks can safely collaborate using a shared blockchain network.
Although JPMorgan has implemented tokenized deposits in the past, Frei noted an important distinction. Their system works only within the JPMorgan ecosystem. On the other hand, the Swiss initiative supports interoperability. This gives it a broader use case and sets it apart from earlier solutions.
“Basically, we launched a new form of payment on the blockchain,” Frei said. He added that this technology could serve as an alternative to stablecoins. Stablecoins are digital assets pegged to traditional currencies or physical commodities like gold. However, they are not issued by regulated banks.
Deposit tokens differ in one key aspect — they are backed by real money and issued by licensed, regulated banks. That backing makes them more secure and trustworthy than typical stablecoins. As a result, the Swiss Bankers Association views them as a major improvement in digital payment systems.
Moving forward, these innovations could reshape how financial institutions operate. For example, payments could become instant, eliminating current delays caused by processing times. Developers could also embed them into automated business systems to improve workflow efficiency and transaction accuracy.
Despite the promise, the banks admit that the system is still in an early development phase. The banks need to conduct more testing and refinement before the public can use it. However, the successful pilot demonstrates blockchain’s real-world potential in banking environments.
The results showed that blockchain technology is not limited to cryptocurrencies. Instead, it can be used to move actual fiat money in a fast, secure, and verifiable way. That discovery could revolutionize how traditional banks handle digital payments and settlements.
Additionally, the study demonstrated the value of cooperation between banks. UBS, PostFinance, and Sygnum Bank worked together on a shared digital infrastructure. This collaboration is rare in the industry and highlights a shift toward open innovation.
Frei emphasized the long-term goal of creating a secure, efficient, and widely accepted blockchain-based payment method. That goal will require ongoing coordination between regulators, financial institutions, and technology providers. Each will play a crucial role in making deposit tokens viable for everyday use.
This development marks an important shift in digital banking. By using blockchain to process transactions with real bank deposits, the system offers faster, cheaper, and more transparent solutions. In time, it could replace some outdated legacy systems that dominate today’s financial landscape.
The Swiss Bankers Association praised the collaboration, calling it a strong example of Switzerland’s leadership in fintech. The country continues to embrace cutting-edge financial technologies, reinforcing its global reputation for innovation in banking.
As more banks consider joining the initiative, the potential impact could grow significantly. A larger network of institutions using deposit tokens could standardize blockchain payments. This would make digital banking more secure, interoperable, and scalable.
At this stage, the three Swiss banks have taken a bold step toward the future. Their successful blockchain payment using real bank deposits sets a high standard. The global financial world is now paying close attention to what Switzerland will do next.
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